The Inland Revenue department (IRD) of New Zealand has made it legal to receive salaries in cryptocurrency. The department which is the island country’s tax office will not only make crypto salaries possible, but also make it possible for one to be taxed accordingly.
This news was released in the departments August bulletin under a new ruling of the income Tax Act in relation to section RD 3. According to the bulletin, an employee can be paid salaries in crypto assets as long as the payments for services rendered are performed under an employee contract. The payments also have to be a fixed amount and a form of regular part of the employee’s remuneration.
The bulletin also insisted that the crypto assets to be used in payments must be liquid enough to be easily exchanged for fiat currency. The crypto assets must also have the primary purpose of acting like a currency pegged to the price of one or more fiat currencies according to the IRD. Crypto assets are provided as shares for income tax purposes and are received under an employee share scheme, the ruling does not apply.
When it comes to income taxation, salaries paid in crypto will be treated as Pay as you earn PAYE. These deductions will be made by the employer and submitted to the country’s tax department. This new ruling which was signed off by the agency’s director of public rulings Susan Price will apply for three years starting September 1 2019.
Before this was put in place, wages were only payable in fiat currencies in New Zealand, effectively the New Zealand dollar. Things look like they are about to change very soon though. This move by the New Zealand tax authorities, demonstrates that more and more countries are beginning to get the message. Cryptocurrencies are here to stay and we might as well start putting crypto assets to good use.
Crypto assets such as BTC have demonstrated their worth over the last several months after a tremendous growth in value. Other crypto tokens such as Ripple have shown their value through x-rapid which has enabled banks and other financial institutions to improve cross-border transactions. Cross-border transactions that used to take days, now take a few seconds with the costs involved being significantly slashed as well. Even with all the benefits that come with dealing in crypto assets, questions about volatility keep coming up, and it remains to be seen whether more jurisdictions will follow New Zealand’s lead.
Image Courtesy of Pexels
